Addressing the Wealth Gap in the United States- Part 2

by Tracey Madden-Hennesey

What is the impact of inequity on wealth?  Recent data analyzed and published by The Institute for Assets and Social Policy (IASP) of Brandeis University, indicates that a substantial racial wealth gap exists in the U.S., perpetuated by history and policy created (intentionally or not) that drives or retains assets in certain sectors of communities (largely White and more affluent) and away from others (particularly poor Black and Hispanic populations).

Given New Britain’s focus in applying an equity lens to Collaborative Problem Solving, this research is of particular interest.  Dean Starkman, in a 2014 review[1] of the IASP research indicated the wealth gap is largely attributed to post civil war policies that favor those with assets.  The roots of the gap, according to the Brandeis researchers, can be traced to policies that address home ownership, earnings and inheritance, education access and inequality.[2]  The racial wealth gap between White and Black families has now ballooned to more than $236,000 and its growth doesn’t appear to be slowing.  CFED (Corporation for Enterprise Development) indicates it will take more than 200 years for populations of color to close the gap.  In a prior post, the impact of housing equity value differences on the wealth gap was discussed.  Education access is cited as the second pillar widening the wealth gap.

According to researchers, “barriers to completing a college degree have actually widened the college attainment gap between whites and people of color over the past 10 years.  In 2011, 34% of white students completed a four-year degree, compared to just 20% of blacks and 13% of Latinos.”[3]  One factor that plays a significant part is the escalating cost of a college education and the debt assumed to manage that cost, paid even when students do not graduate.  Another issue is the disparity on the rate of return for a college degree between whites and people of color.  Given the additional debt, students of color assume to complete their degree, and a lower earned salary over the course of their life, researchers indicates the average amount of wealth attributed to a college degree for a white family is more than 10 times that of a Black or Latino family.   On average, white families will accrue $11.49 for every $1 of wealth earned by a Black Family attributed to a four-year college degree.[4]

auditorium, benches, chairs

To address the disparity in the wealth gap created by education, researchers recommended the following[5]:

  • Invest in universal, high-quality preschool education. Ensuring children’s access to preschool increases the likelihood that all children, particularly, low income children, enter kindergarten better prepared to learn.
  • Make K-12 education funding more equitable. In Connecticut, in particular, there are stark differences between the resources available wealthy and poor school districts.  Funding patterns reflect highly segregated communities in which families live.  Students of color are more likely to find themselves living in urban areas with high concentrations of poverty and underfunded schools.  Adopting educational funding patterns that address this resource disparity is essential to reducing the wealth gap.
  • Increase racially integrated schools, colleges, and universities. There is evidence that desegregation reduces racial disparities.  Therefore, policies that support integration can positively impact the racial wealth gap.
  • Finally, increasing opportunities for low income students, particularly those of color, to attend college without becoming buried in debt would increase the return on investment for a college degree.

Researchers indicate adopting one of these steps in isolation will not make a significant impact on the racial wealth divide.  Multiple solutions to address the gap created by education are needed to make a difference.

 

 

[1] Starkman, “The $236,500 Hole in the American Dream,” New Republic, June 30, 2014, https://newrepublic.com/article/118425/closing-racial-wealth-gap

[2] Sullivan, Laura, et al; “The Racial Wealth Gap; Why Policy Matters,” Demos.org, NY; IASP, Brandeis University; 2015.

[3] Sullivan, pg. 16.

[4] Sullivan, pg. 20.

[5] Sullivan, pg. 22